FIRST QUARTER RESULTS MEET EXPECTATIONS

Yields up 12.9 per cent in the quarter
First quarter pre-tax profit of £40 million
Overall passenger capacity down 8.6 per cent
Operating profit of £50 million

British Airways today announced a pre-tax profit of £40 million (2000: loss of £50 million), for the three months to June 30, 2001.

Operating profits for the period were £50 million (2000: £97 million).

Group turnover for the three-month period was down 0.6 per cent, at £2297 million, on a flying programme 8.6 per cent less in available seat kilometres (ASKs), in line with the group strategy. Traffic volumes, measured in RPKs, fell by 11.3 per cent.

Yields were up a substantial 12.9 per cent in the quarter, demonstrating the continued success of the airline’s business strategy. Total costs rose by 1.5 per cent, while unit costs were up 7.8 per cent primarily reflecting fuel and exchange rate impact, and the reduction in capacity.

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The implementation of our product, network and fleet strategy, which is driving the yield improvement, is on track. All short haul product embodiment is complete and, by spring 2002, we expect to offer the full range of new products on 75 per cent of our long haul services. Meanwhile, the Club World flat bed continues to deliver increased market share.

Exceptionals for the period included proceeds of £100 million from the sale of Go.

Lord Marshall, British Airways’ Chairman, said: “We are committed to driving forward our strategy. Strengthening our alliances is a fundamental element of this and we will work closely with the regulatory authorities to secure the necessary approvals for our deeper relationship with American Airlines.”